In its latest measure to open up ruthless battling among U.S. exchanges, the Securities and Exchange Commission voted Wednesday to open trade in all New York Stock Exchange-listed stocks to non-members of the Big Board.

By a unanimous vote, the SEC also moved to allow regional exchanges to trade initial public offerings on the day of their debut. The panel also agreed to closely examine how the NYSE and Nasdaq set fees for crucial market data.

'Long overdue'

SEC Chairman Arthur Levitt said the move to fully open trading in NYSE-listed stocks was "long overdue" and is a key step toward establishing a true national market system.

"As we enter a new century, our markets must not be fettered by impediments or anticompetitive practices that stand in the way of our market's own natural genius," Levitt told fellow commissioners. "I believe that today's initiatives will further clear the path by removing certain obstacles to greater intermarket competition."

ECN access to come

The rule change gives National Association of Securities Dealers members full access to all NYSE stocks through the Intermarket Trading System, which links NASD and all U.S. exchanges. The ITS ensures that brokers obtain the best price for a trade regardless of its market of origin.

The SEC measure repeals a rule that had complemented the NYSE's so-called Rule 390, which forbade members to trade stocks listed on the NYSE before 1979 off of the exchange. The NYSE board, under pressure from Levitt, voted last week to abolish Rule 390.

While the rule covered less than a third of the exchange's stocks, it did encompass many high-profile blue chip listings accounting for nearly half of Big Board volume.

An NASD spokesman applauded the SEC measure.

"By eliminating this rule, investors large and small will benefit from a marketplace that soon will be even more price competitive than it is today," the spokesman said.

While the measure won't give ECNs immediate access to all Big Board stocks, SEC officials said the rule change is a step in that direction.

ECNs don't have access to the ITS, which is open only to established exchanges. As a result, several ECNs, including Island ECN and Reuters'
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Instinet have applied to the SEC to become exchanges.

Investors "are demanding and deserve a linkage between ECNs and the listed market, and we intend to work expeditiously to ensure that such a linkage materializes shortly," Levitt said.

Matthew Andresen, president of Island ECN, said Wednesday's SEC measures are a good step toward enhancing intermarket competition.

"Imagine how good it will be once (ECNs) are able to compete with the exchanges. Investors will be able to vote with their feet," Andresen told CBS.MarketWatch.com.

Instinet CEO Doug Atkin said the measure is a "step in the right direction." He urged the SEC to move quickly to institute other reforms that will give ECNs direct ITS access.

The SEC also voted to allow regional exchanges to begin trading in initial public offerings the same day the stock goes public, waiting only until the first trade in the security is reported. The existing rule required regional exchanges to wait until the second day of trading.

The commission is also seeking public comment on how the NYSE and Nasdaq structure their market fees. Demand for stock quotes and other data has skyrocketed at the retail level amid the advent of online trading.

The Securities Industry Association, a trade group representing broker-dealers, vowed to closely examine the proposals and the concept release, which are all open to public comment.

"These and other issues that the SEC plans to address in the coming months are enormously complex and will require detailed analysis from the securities industry," said SIA general counsel Stuart J. Kaswell. "Our views will be guided by the extent to which the new proposals bolster competition to maximize efficiencies of the capital markets while ensuring fairness for all investors and maintaining tough, effective safeguards."

Wednesday's measures come amid a rapidly changing trading landscape that has been transformed in part by the growth of ECNs, which now account for roughly 30 percent of trade in Nasdaq stocks. Partly in response, the NYSE and the NASD, which is the parent of the Nasdaq market, have both discussed plans to demutualize and become for-profit exchanges.

The current membership structures of the NYSE and NASD are seen hampering the ability of management to make fleet-footed strategic changes in response to technological innovations and competitive challenges.

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